Brokers Capitalize on Health Marketplace Problems

By Michael Waddell

Group Benefits LLC is growing its business by helping local businesses evaluate group health options on and off the new health insurance exchange and comply with the Affordable Care Act.

Tennessee’s Small Business Health Options Program – or SHOP – marketplace was set to open Oct. 1 but has been delayed until sometime in November.

FINNELL

“Nothing has run smoothly so far,” said Timothy J. Finnell, president and founder of Group Benefits and a certified health care reform specialist. “It’s basically just not working. The SHOP marketplace is not up at all, and many people have not been able to get through on the individual exchange. The online technology is the main issue.”

He feels that obtaining health insurance can be confusing for most people.

“There are now more than 25,000 pages of the law, rules and (regulations), measuring more than 8 feet tall. The idea that this new system is going to be simple and easy to understand, I think, is very misleading, so I think the role of the broker is actually going to be increased going forward” said Finnell, who has worked in the insurance industry since 1978. “The advice of a credentialed, experienced person with national resources can be very beneficial, and we’ve been very pleased to see an uptick in business.”

Group Benefits writes some individual policies, but more than 90 percent of its activity comes from group plans – including medical, life, dental and disability – for businesses of all sizes.

Finnell compares the marketplace to a vending machine that is filled with perfectly fine products, yet the machine is broken.

“The SHOP exchange is not expected by anyone to have much activity and gain much traction. It does not serve a significant purpose, other than the one exception of the ability of a business to obtain a federal tax credit. However, a very, very small percentage of businesses qualify, based on employee income and payroll factors,” said Finnell, who was certified by the National Association of Health Underwriters as a health care reform specialist in January.

To be eligible for the small-business health care tax credit, businesses are required to have fewer than 25 full-time equivalent employees making an average of $50,000 a year or less. Employers also are required to pay at least 50 percent of employee premiums.

Thus far, only one of the 70 businesses with which Group Benefits works actually qualifies for the credit.

Finnell stressed that groups will pay the same price whether they buy insurance on the exchange or through a broker.

“I don’t know why anyone would shop on the marketplace, other than the tax credit,” he said. “We expect most businesses to continue to shop through brokers instead of on the exchange because the costs are regulated by the state. Costs will be the same whether they do it themselves or go through us.”

Group Benefits will help business owners determine if they are eligible to use the exchange or qualify for the ACA small-business health care tax credits, and they will advise owners if they should consider off-exchange options as well.

Finnell cites one client that has 25 employees with a lot of medical issues.

“We are expecting a 20 percent to 25 percent decrease for them, because with groups of 50 employees or less, they will not be able to ask medical questions (about prior history),” he said. “But overall, everyone is going to pay more because we have to subsidize the people that are lower income and pay a significant burden for them.”

Another issue is that fewer than 20 “navigators” have been allocated for the state of Tennessee and Shelby County to help individuals and groups sign up for new coverage.

“The grant money seemed to be disproportionately allocated to states that were running their own exchange, because the federal government wants states to run their own exchange. So the states that did got more money,” Finnell said.

Group Benefits formed six years ago and is a franchise of NFP division Benefits Partners, one of the largest broker organizations in the country.

“We get the buying power of a huge, national company, while maintaining local ownership and independence,” said Finnell, who believes solo brokers and small firms will have an increasingly difficult time surviving post-ACA.

Group Benefits is currently adding staff to accommodate its increased business. Two established solo brokers, Ben Arnold and Michael McManus, recently joined the firm.

Revenue is up 25 percent this year, and Finnell expects more of the same in 2014.